Former Finance Minister P Chidambaram on Monday welcomed the Reserve Bank of India (RBI’s) announcement of a Rs. 50,000 crore special liquidity facility (SLF) for mutual funds.
Earlier today, the central bank announced a Rs. 50,000 crore special liquidity facility for mutual funds (SLF-MF) in the wake of redemption pressures faced by the industry following Franklin Templeton Mutual Fund’s decision to close six of its debt schemes.
The announcement was made to ensure the stability of the financial system, which is in deep stress due to Covid-19 pandemic and to pre-empt any contagion effect in the financial markets.
On Saturday, the Congress leader issued a statement terming the winding up of six debt schemes by Franklin Templeton as a ‘grave concern’ to the investors.
He also recalled how the UPA government had handled a similar liquidity stress faced by the mutual fund industry during the 2008 global financial crisis.
Last week, Franklin Templeton Mutual Fund announced that it will wind up six of its debt schemes due to redemption pressure and tight liquidity in bond markets caused by the coronavirus pandemic.